Dubai-Mubasher: Arqaam Capital expected Emirates Integrated Telecommunications Company (du) to be the next candidate in the MENA telecom space for increasing its foreign ownership limit (FOL) after Etisalat's rose to 20% in September 2015, according to a recent statement.
The investment bank sees that lifting foreign ownership restrictions will contribute to increasing liquidity of du shares, thus qualifying it for the MSCI emerging markets index after 12 months if it were to lift the foreign ownership for institutional investors.
Arqaam estimated du stock’s annualized Traded Value Ratio (ATVR) to have been only 9% in 2015, below the required 15%, Tibor Bokor, head of TMT research at Arqaam.
Bokor added that liquidity would need to grow by 67% to an average daily trading volume (ADTV) of $1.0 million compared to the current $0.6 million.
The bank expected the ADTV to increase to at least $2-3 million per day based on the liquidity of similar sized stocks that allow foreign ownership.
Arqaam set du’s target price at AED 6.4, with “Buy" recommendation.
